The Fed should hike rates by 50 bps, says Komal Sri-Kumar

Summary

Komal Sri-Kumar, president of Sri-Kumar Global Strategies, argues the Fed should hike rates by 50 basis points because inflation remains above target and rising oil prices and tariffs are more important than a single CPI print. He expects long-end Treasury yields to rise sharply even if the Fed hikes only 25 basis points or stays put, with the 10-year hitting 5% and the 30-year reaching 5.75% creating significant headwinds for the economy, AI, and equities. He also discusses PCE revisions, data credibility, and political pressure on the Fed.

• Komal Sri-Kumar says the Fed should hike 50 bps, not 25 bps.
• Inflation remains well above the 2% target and hasn't been met for five and a half years.
• He sees oil prices and tariffs as more important inflation fundamentals than CPI.
• Long-end Treasury yields are expected to rise sharply, with 10-year at 5% and 30-year at 5.75% as key thresholds.
• Rising long-end yields would hit mortgages, government debt, the economy, AI, and equities.
• He criticizes potential data adjustments and PCE revisions as looking like doctoring.
• He notes political pressure on the Fed chair but thinks Jackson Hole remarks may be sincere.